The Town of Smithtown is considering the adoption of a local law that would allow residential uses as part of mixed-use developments in the Hauppauge Industrial Park.[1]  The proposal follows on the heels of an April 2019 report commissioned by the Suffolk County Industrial Development Agency (“SCIDA”) which called for the park to position itself to become a regional economic hub that fosters the growth of key industries by, among other things, creating a more dynamic live-work-play environment that will attract and keep workers.

According to HIA-LI (formerly Hauppauge Industrial Association), the Hauppauge Industrial Park is the second largest industrial park in the nation, topped only by California’s Silicon Valley.  It is comprised of approximately 1,400 acres of land and is home to over 1,300 companies which employ about 55,000 people.  The 13 million square feet of construction, manufacturing and service industry space in the park generate approximately $13 billion in annual output or about 8% of Long Island’s gross domestic product.  While the Hauppauge Industrial Park plays an important role in Long Island’s economic development, many of its industrial occupants have closed their facilities in recent years.

The SCIDA report noted that while 39% of Long Island’s population over 25 years old have Bachelor’s degrees, many young adults do not work on Long Island.  Instead, college-educated millennials are attracted to more urban environments that offer walkable communities, with a variety of restaurants, bars and other social venues, and more diverse and affordable housing options.  Moreover, it is now widely recognized that employers go to places where employees want to live.  Thus, the report specifically calls for local zoning authorities to amend their zoning regulations to allow new mixed-use buildings in portions of the park fronting on major thoroughfares.

The Town of Smithtown has answered that call by proposing amendments to the Hauppauge Industrial Park Overlay District regulations that apply to the Light Industrial zoned properties in the Hauppauge Industrial Park.  The most significant amendment authorizes the Town Board to approve mixed-use buildings in certain areas of the park as a special exception if it finds that the proposed use is desirable and compatible with the surrounding area and the proposal satisfies certain minimum conditions.  For instance, in order to be eligible for a special exception, a proposed mixed-use building must be located on a lot that is at least seven acres in size that has frontage on Motor Parkway or on Old Willets Path south of Rabro Drive, or within 500 feet of certain designated intersections.  Approximately 13 parcels would be eligible for mixed-use development, which could result in the construction of as many as 1,000 apartments units within the industrial park.

Within a mixed-use building, a minimum of 50% of the ground floor must be occupied by active uses. An “active use” is defined in the proposed local law as “a use that generates daily public patronage, including . . . bars, commercial entertainment, restaurants, museums, retail (sales and service), personal service, offices, and similar uses, and a use which provides an amenity for building residents.”  Mixed-use developments must provide off-street parking that meets the parking requirements of the sum of the parking stalls required for each use within the building.  Lastly, at least 20% of the residential units shall be affordable workforce housing units and comply with the Town’s Affordable Workforce Housing Policy.

The Town Board held a virtual public hearing on May 21, 2020 to consider the proposed zoning amendments, and was sharply criticized by opponents of the law who argued that scheduling a public hearing on such an important proposal at 2 p.m. was “offensive” and that the virtual Zoom format lacked transparency.  Opponents of the law included residents of Hauppauge and the surrounding areas, and the president of the Hauppauge Board of Education, who claimed that mixed-use buildings would bring congestion and increase demands on public services like fire, police and schools.  Not surprisingly, the Town Board heard from a number of local developers and builder’s organizations who expressed support for the legislative proposal and see it as a catalyst for attracting new companies and industries to the park.

The public hearing was closed on May 21st, but the record was held open for 20 days for additional comment.  The Town Board formally closed the record on June 11th, and is expected to act on the proposed zoning amendments as soon as it completes its review under the State Environmental Quality Review Act (SEQRA).

[1] The Hauppauge Industrial Park is in the process of being rebranded as “The Long Island Innovation Park at Hauppauge.”

In a recent decision, Matter of Red Wing Properties, Inc. v. Town of Rhinebeck, et al., the Second Department held that a landowner’s intent to continue using its property for mining operations established a valid pre-existing nonconforming use.

Red Wing Properties, Inc. (“Petitioner”) owns roughly 241 acres of property located with the Town of Rhinebeck (the “Town”).  For several years, Petitioner used its property for sand and gravel mining.  However, at the time of this lawsuit, the majority of the property remained unmined.

A 2005 permit issued by the New York State Department of Environmental Conservation (“DEC”) allowed Petitioner to mine only 37.5 acres of its property.  In 2008, Petitioner sought to increase that allowance to 141 acres.  The DEC required that Petitioner conduct a number of studies to determine the impact of the proposed mining on the surrounding environment.  In particular, the DEC was concerned about an endangered turtle species in the area, and required a study with respect to that.  That study alone took six years and cost Petitioner over $125,000.  In 2010, due to the various environmental concerns and Petitioner’s desire to expedite the process, Petitioner reduced its proposed mining area to 124 acres.  In 2015, it further reduced its proposal to 94 acres.

Shortly after Petitioner’s latest reduced proposal, and while its “application to the DEC was still pending, the Town enacted a new zoning law that allowed mining on only those lands in the Town upon which there were existing, DEC-permitted mining operations.”  Thereafter, Petitioner sought a determination from the Town that it had a vested right to mine all of its property as a prior nonconforming use.  The Town’s Zoning Enforcement Officer (the “ZEO”) denied Petitioner’s application for such determination, and the Town’s Zoning Board of Appeals (the “ZBA”) confirmed the ZEO’s decision.

Petitioner then brought a hybrid proceeding under Article 78 of the CPLR seeking reversal of the ZBA’s determination, and a declaration that it had a vested right to mine the entirety of its property as a prior nonconforming use.  The Supreme Court dismissed that proceeding and Petitioner appealed.

The Second Department effectively reversed.  A nonconforming use is a use that is “‘in existence when a zoning ordinance is enacted, [and is], as a general rule, constitutionally protected and will be permitted to continue, notwithstanding the contrary provisions of the ordinance’ (Glacial Aggregates LLC v Town of Yorkshire, 14 NY3d 127, 135 quoting People v Miller, 304 NY 105, 107).”  Often, property owners whose land is permitted for mining or other quarrying will not excavate the entirety of the land at once, but will rather excavate one area at a time, leaving the remaining resources in the land until they become needed.  Where an property owner does this “‘over a long period of time and . . . clearly manifest[s] an intent to appropriate the entire parcel [for] quarrying, the extent of [the] protection afforded by the nonconforming use will extend to the boundaries of the parcel even though extensive excavation may have been limited to only a portion of the property’ (Matter of Syracuse Aggregate Corp. v Weise, 51 NY2d [278,] 286).”

The Second Department held that Petitioner manifested an intent to mine more of its property as early as 2008, when it submitted its initial application to the DEC.  In the years thereafter, it amended its application to ultimately reduce the proposed mining area to 94 acres.  Based on that most recent amendment, made prior to the enactment of the new law, the Second Department found that Petitioner had a vested right to mine up to 94 acres of its property, protected as a prior nonconforming use.  Petitioner was entitled to a declaration to that effect, and the Supreme Court should have annulled the determinations of the ZBA and ZEO that found otherwise.

How and when to challenge multiple municipal actions regarding a single project often perplexes Article 78 litigants. Varying statutes of limitations may apply to actions taken at various stages for one project, and the judicial concepts of finality and ripeness affect the viability of a challenge. For example, a litigant must challenge a lead agency’s determination pursuant to the State Environmental Quality Review Act (“SEQRA”) within four-months, but must challenge a zoning board’s decision within 30 days. Moreover, a planning may issue a negative declaration under SEQRA early in the process, but the project’s other approvals (e.g. area variances, site plan approval) may not be issued until later.

Last week, the Supreme Court, Ontario County, issued an illustrative decision in Concerned Citizen of Farmington v Town of Farmington, 2020 NY Slip Op 50690(U) [Sup Ct Ontario Co, Jun 16, 2020], which granted the respondents-defendants’ motion to dismiss the petitioners-plaintiffs’ challenge to a negative declaration issued pursuant to the SEQRA for lack of finality and ripeness where the planning board (as lead agency) issued a SEQRA negative declaration, but the planning board had not approved the subdivision plat, special permit or final site plan.

In 2018, Delaware River Solar LLC (“DRS”) proposed to build a large-scale solar farm on 135 acres in the Town of Farmington (“Farmington”), which required, among other things, subdivision plat approval, a special use permit, and site plan approval. The project is considered a Type I action under SEQRA and required environmental review to determine whether it would have one or more significant environment impacts. If the SEQRA lead agency answers in the affirmative, then it issues a positive declaration of environmental significance – requiring preparation of an environmental impact statement; otherwise, it issues a negative declaration concluding environmental review. Additionally, DRS applied to the Farmington Zoning Board for area variances seeking relief from setback requirements.

On August 7, 2019, after numerous public hearings, the Farmington Planning Board (acting as lead agency) issued a negative declaration under SEQRA. The petitioners-plaintiffs (“Petitioners”) commenced a hybrid proceeding-action on September 6, 2019, challenging the issuance of the negative declaration and seeking a temporary restraining order and permanent injunction to prohibit DRS from starting construction at the work site. Petitioners argued that the Farmington Planning Board’s negative declaration violated SEQRA’s procedural and substantive mandates. DRS, Farmington and others (“Respondents”) moved to dismiss.

During the pendency of the motions, the Farmington Zoning Board denied DRS’s application for the area variances. DRS, accordingly, revised its site plan to avoid the need for area variances. Thereafter, the Farmington Planning Board conducted additional public hearings on DRS’s revised site plan and issued a second negative declaration on December 18, 2019. The Petitioners filed an amended petition-complaint to address the same, and the Respondents filed their motion to dismiss (at issue herein) for failure to state a claim and for lack of ripeness.

Respondents argued that the Farmington Planning Board did not yet approve the subdivision plat, the special permit or the final site plan; therefore, there is no final agency action subject to judicial review. The Petitioners argued that the negative declaration is a final agency action by the Farmington Planning Board which caused an actual, concrete injury to them that cannot be ameliorated by further administrative action; therefore, a judicial controversy ripe for review exists as to whether the Farmington Planning Board violated SEQRA. The Court agreed with Respondents and granted the motion to dismiss, without prejudice, for lack of finality and ripeness.

Whether agency action is ripe for review depends on several considerations. “[A] pragmatic evaluation must be made of whether the decision maker has arrived at a definitive position on the issue that inflicts an actual, concrete injury”; that is, “the action must impose an obligation, deny a right or fix some legal relationship as a consummation of the administrative process and consideration must be given to the completeness of the action.” Moreover, “the injury purportedly inflicted by the agency may not be prevented or significantly ameliorated by further administrative action or by steps available to the complaining party.” The Court noted the ripeness doctrine is “closely related” to the finality requirement.

The Petitioners’ contended that they suffered a concrete injury because the negative declaration allows the project to proceed without the benefit of an environmental impact statement, which would identify significant adverse impacts to the community and require mitigation therefor. Further, the Farmington Planning Board will not necessarily be required to revisit its negative declaration at any subsequent time throughout the approval process, so the decision is final. The Court disagreed, relying largely upon Eadie v Town Bd. of Town of N. Greenbush, 7 NY3d 306 [2006].

In Eadie, the Court of Appeals heard a challenge to rezoning and addressed whether the four-month statute of limitations for Article 78 claims began to run from (i) the earlier time when the Town Board completed the SEQRA process by releasing a generic environmental impact statement or (ii) the later time when the Town Board adopted the proposed rezoning. The Court of Appeals held that the statute of limitations ran from the adoption of the rezoning – not from the earlier completion of the SEQRA process – because the petitioners did not suffer a concrete injury until the Town Board approved the rezoning; the injury was merely contingent upon the rezone, which could have been defeated by a protest petition or a failed vote.

In this present case, the Court analogized the Petitioners’ position to the petitioners in Eadie. The Petitioners’ injury is only contingent because the Farmington Planning Board could decline to approve the subdivision plat, the special permit or the final site plan. In these circumstances, the project could not proceed and no injury would accrue to the Petitioners. Notably, the Court emphasized that the Farmington Planning Board’s grant of preliminary subdivision plat approval and its posting of a draft resolution granting the special use permit do not change this conclusion because these preliminary steps do not constitute approval: “[a]n agency’s position will not be considered final if it is tentative, provisional or contingent, subject to recall, revision or reconsideration.”

The Court held the Petitioners’ challenge was neither final nor ripe for review under Article 78 (Article 78 precludes challenges to non-final determinations), and dismissed without prejudice. The Court also dismissed Petitioners’ declaratory judgment action because this is an inappropriate vehicle to challenge an administrative determination as arbitrary and capricious, an abuse of discretion, contrary to law or irrational – which challenge is limited to Article 78.

For the last several years, municipal governments across Long Island, and beyond, have been taking action to control or outright ban short-term rentals in their communities. Inevitably, these efforts have met opposition from both entrepreneurial property owners and the home-sharing services that support them. Lawsuits challenging local regulation of short-term rentals have popped up across the country, and they often raise questions about whether such regulations–which have direct implications on a property owner’s “bundle of rights”–are constitutional. In the Fourth Department’s recent decision in Matter of Wallace v Town of Grand Island (CA 19-00925, decided June 12, 2020), the question before the Court was whether the specific regulations under review effected a regulatory taking of real property for which just compensation was owed. The Appellate Court answered “no.”

In Wallace, the petitioner-plaintiff (plaintiff) purchased a single-family home in the Town of Grand Island for the specific purpose of operating a short-term rental. A few years later, the Town amended its zoning regulations to prohibit short-term rentals in certain zoning districts, except where the property was also owner-occupied. The law contained a one-year amortization period, which an affected property owner could petition to extend up to three times.

After the new law took effect, the plaintiff sought an extension of the amortization period as well as a use variance allowing him to continue operating his short-term rental indefinitely. The defendant Town boards denied his applications. In response, the plaintiff sued seeking (among other things) a declaration that the regulations were void on the grounds that they resulted in an unconstitutional regulatory taking of his real property.

On appeal, the Fourth Department affirmed dismissal of the plaintiff’s claims, concluding that the short-term rental law did not effect a regulatory taking of the plaintiff’s property. Applying the test set forth in the seminal case of Penn Central Transportation Co. v New York City, 438 US 104 (1978), the Court found that the plaintiff failed to provide “dollars and cents proof” (i.e. financial evidence) that “the subject premises was not capable of producing a reasonable return on his investment or that it was not adaptable to other suitable private use.” (Memorandum and Order at p. 3). At best, the plaintiff established a “mere diminution” in property value, which is not sufficient to establish a regulatory taking (Id.). The Court observed that the plaintiff was not precluded from selling the property at a profit, or from renting it on a long-term basis. (Id.). Finally, the Court noted that, even if plaintiff successfully established a regulatory taking, the proper relief for his claim would have been a hearing on just compensation, not invalidation of the law. (Id.).

The Court’s decision in Wallace is another weight on the scale for local control over short-term rentals. However, the dispute over these uses still seems far from over. A copy of the Court’s Memorandum and Order is available by clicking the following link: Mtr of Wallace v Grand Island.

In the Matter of Giora Neeman v Town of Warwick, __AD3d__, 2020 NY Slip Op 03112, the Second Department recently declared that a development agreement entered into between the respondent/defendant Black Bear Family Campgrounds, Inc. (“BBFC”) and respondent/defendant, Town of Warwick, (“Town”) as part of a settlement of a separate civil proceeding, constituted illegal contract zoning, and was therefore, null and void.

This is a cautionary tale of how making a deal with a governing body in exchange for zoning amendments can run afoul of the legal principle “contract zoning” – an illegal practice in which local officials cross the legal line between a legitimate planning process and an improper ceding of the municipality’s authority to regulate land use.  As stated by the Court of Appeals “all legislation ‘by contract’ is invalid in the sense that a Legislature cannot bargain away or sell its powers.” Church v. Town of Islip, 8 N.Y.2d 254, 259, (1960).

Here, back in 1965, the Town of Warwick Planning Board (“Planning Board”) approved a site plan permitting 74 campsites on the BBFC property.  Over the years, without approvals or permits, BBFC expanded to 154 campsites.  In 2008, the Town issued numerous violations for BBFC’s illegal operations and zoning violations.  In connection with settling this separate civil proceeding initiated by the Town, BBFC entered into a “Development Agreement” in which, the Town Board agreed that it would amend the zoning code’s time limit to stay at the campground from 120 days to 210 days and would modify the bulk requirements for campgrounds prior to the approval of BBFC’s site plan applications and variances.

In finding the Development Agreement null and void, the Court explained that “no municipal government has the power to make contracts that controls or limit it in the exercise of its legislative powers and duties”.  The Court went on to state that the test is whether the Development Agreement committed the Town to a specific course of action with respect to a zoning amendment.  Noting that the Town Board agreed to amend the zoning code to permit a 210-day occupancy limit, in exchange for BBFC’s agreement that such limit would apply to all campsites, the Court found that it was a contractual agreement between BBFC and the Town with consideration exchanged for legislative action that limited the Town Board’s authority to amend the zoning code until such time as BBFC would not be negatively affect by such a change.

Although not the subject of this blog, the Court also went on to find that the Planning Board adoption of its negative declaration was arbitrary and capricious.

Take away: Practitioners for property owners and municipal boards must carefully navigate negotiations between developers and local officials to avoid illegal contract zoning, which improperly cedes municipal authority to regulate land use.

 

The Lattingtown Harbor Property Owners’ Association, Inc., (“POA”) entered into a license agreement, dated November 29, 2017, with another member, Peter Tully, granting an exclusive right to affix private docks to the POA’s community dock in exchange for a license fee and services provided to the POA by Tully’s construction company. Another member of the POA, Peter Beckerman, brought an Article 78 Proceeding against the POA to annul the license agreement, alleging that the POA acted outside of the scope of its authority.

The Supreme Court, Nassau County, in Beckerman v. Lattingtown Harbor Property Owner’s Association Inc. et al. decided by Roy S. Mahon, J., Index No. 586-2018, dated November 7, 2018., granted the Article 78 Petition annulling the license agreement which granted Tully exclusive rights to use the POA’s community dock. Petitioner argued that the community dock constitutes community property and any agreement by the POA granting exclusive use of common area property exceeded the power and authority of the POA Board in violation of the By-laws and Declaration governing same. Respondent Tully intervened in the proceeding and alleged that he had private dock rights consisting of a floating dock attached to the community dock for approximately 16 years and in exchange for his dock rights his construction company provided services to the POA by maintaining the land, structures and waterways of the POA for that time period.

Respondents sought dismissal of the proceeding, in part, by alleging that the POA’s actions were protected by the business judgment rule. Both reviewing courts set forth the business judgment rule standard of review stating,

“In reviewing the actions of a homeowners’ association, a court should apply the business judgment rule and should limit its inquiry to whether the action was authorized and whether it was taken in good faith and in furtherance of the legitimate interests of the association” (19 Pond, Inc. v Goldens Bridge Community Assn., Inc., 142 AD3d 969, 970). In the case of a homeowners’ association, a court should defer to the homeowners’ association’s board’s actions “‘so long as the board acts for the purposes of the [homeowners’ association], within the scope of its authority and in good faith’” (Matter of Cohan v Board of Directors of 700 Shore Rd. Waters Edge, Inc., 108 AD3d 697, 699, quoting 40 W. 67th St. v Pullman, 100 NY2d 147, 153). However, “[t]he business judgment rule does not apply when a cooperative board acts outside the scope of its authority or violates its own governing documents” (Matter of Cohan v Board of Directors of 700 Shore Rd. Waters Edge, Inc., 108 AD3d at 699). See Matter of Beckerman v. Lattingtown Harbor Property Owner’s Association, Inc. et al. Appellate Division, Second Department, 2019-00279, dated May 20, 2020, page 2.

After reviewing the governing documents of the POA including the By-laws and Declaration, the Supreme Court found that the POA’s members had the “unfettered right to use the entire community dock as community property.” Therefore, the Court found that the Board’s agreements to allow Tully an exclusive use of a portion of the community dock was not only unauthorized, but in fact “specifically barred by the governing documents.” The Court held that community property could not be excluded from the members’ use.   Additionally, the Court stated, “furthermore, two of the five members on the Board when Tully’s license agreement was entered were the Tullys themselves, calling the Board’s good faith into serious question.” Moreover, the Court found that Tully’s contributions in exchange for his dock privileges failed to negate the inconsistency with the governing documents of the POA. Thus, the Supreme Court annulled the license agreement. Tully appealed.

The Appellate Division Second Department in Matter of Peter Beckerman v. Lattingtown Harbor Property Owners Association Inc. et al., 2019-00279, dated May 20, 2020, affirmed the Supreme Court’s determination annulling the license agreement. Citing the business judgment rule as the standard of review (set forth above), the Court held that entering into a license agreement was outside of the POA Board’s authority because the POA’s Declaration states that each member of the POA “is privileged to use the POA’s community recreational facilities in common with other members, and that the modification or cancellation of that privilege is not permitted.” The Court further stated, “[b]y granting Tully the exclusive right to affix his private docks to the POA’s community dock, the Board prevented other members from docking their boats at the portion of the POA’s community dock to which Tully’s private docks are affixed.” Accordingly, the Court affirmed the Supreme Court’s determination annulling the license agreement.

 

Last week, the New York Supreme Court, Suffolk County, denied an application for a preliminary injunction to enjoin the completion, maintenance and operation of two sixty-foot tall electronic billboard-monuments (“Project”) on opposite sides of State Route 27 a.k.a. Sunrise Highway, which Project is owned by the Shinnecock Indian Nation (“Nation”).

 

A.  The Project and the State’s Action

In or about the spring of 2019, the Project’s construction began. In late May 2019, the State of New York (“State”) commenced an action against various defendants in Commissioner of the State of New York Department of Transportation, et al. v. Polite, Index No. 610010/2019 [Sup Ct., Suffolk Co., May 18, 2020], seeking to prohibit the Project. The State claims, among other things, that the land upon which the Project is situated is not part of the Shinnecock Indian Reservation, is not aboriginal or sovereign land, and is within the State’s right-of-way; therefore, the State has jurisdiction over any structures placed therein.

B.  The Court’s Previous Order Temporarily Restraining the Project

By Order to Show Cause issued May 24, 2019, the Court “stayed” the defendants and all those acting on their behalf from conducting any activities relating to the construction, maintenance or operation of the Project – pending a hearing on the State’s application for a preliminary injunction. Since then, and despite the temporary restraining order, construction of the Project continued and at least part of it has been completed and is operational.

C.  The Court Denies the Preliminary Injunction

In order to obtain a preliminary injunction, the movant must demonstrate (i) a likelihood of success on the merits, (ii) irreparable injury absent the granting of the preliminary injunction, and (iii) the equities balance in its favor. The Court held that the State failed to meet its burden of proof for a preliminary injunction.

1.  Likelihood of Success

With respect to a likelihood of success on the merits and the status of the subject land, the Court noted the State’s “showing largely relies on the outcome of inconclusive prior litigation between the State and the [Shinnecock] Nation, and others in federal court.” In particular, the State relied upon a decision of the United State District Court for the Eastern District of New York addressing proposed gaming casinos, and which granted a permanent injunction; that decision, however, was vacated on appeal.

The Court found that the State’s allegation that the subject land is not aboriginal or sovereign is subject to dispute, and that it is undisputed that the Nation’s ancestral domain encompassed essentially the entirety of what is now the Town of Southampton, which presence has been continuous. “Ultimately, the burden will be upon the State . . . to refute the defendants’ contention that the Nation has sovereign control over the [subject property]. On the current record, it is impossible to conclude that the [State] will succeed in doing so.” The Court also noted that the defendants continue to challenge the validity and effectiveness of the instruments which support the State’s case.

2.  Irreparable Harm and Balancing the Equities

With respect to irreparable harm, the Court held that the Project’s electronic displays do not pose the disruptive consequences attributed to gaming, and the Project does not pose an unacceptable safety risk because it is being built to engineering standards. And, in balancing the equities, the Court found the advertising revenue from the Project represents an important source of income for the Nation.

The Court concluded “it is of the view that a preliminary injunction preventing operation of the [Project] is unwarranted, that the [State] would suffer not irreparable harm in the absence of a preliminary injunction, and that the equities do not balance in favor of the defendants [sic], provided defendants have constructed and are operating the [Project] in compliance with appropriate structural and other safety standards.”

In an effort to enforce social distancing and slow the spread of the coronavirus, many cities and states across the nation have adopted emergency orders mandating that restaurants, including fast-food chains, shut down their dine-in facilities.  Not surprisingly, these new mandates resulted in a precipitous loss of business and have caused many restaurants to adjust their operations to provide take-out and delivery service.  However, fast-food restaurants with drive-thru windows are not experiencing the same loss of business, and many are actually thriving.  Since having a drive-thru window may be a fast-food restaurant’s best chance at survival in the world of social distancing, it may be good time for local governments to ease the restrictions on drive-thrus.

The origin of the drive-thru restaurant has long been disputed, but most people recognize California’s Pig Stand No. 21 as having the nation’s first drive-thru window in 1931.  However, the success of the drive-thru can be attributed to In-N-Out Burger, which opened its first restaurant in Baldwin Park, California in 1948.  In-N-Out’s novel design involved a 100 square foot building with no inside seating or parking.  Customers would drive up to a window and place their orders using a two-way intercom.  Despite In-N-Out’s success as a drive-thru, other fast-food restaurants were slow to follow suit.  In 1951, Jack in the Box opened its own drive-thru-only restaurant in San Diego.  McDonald’s first restaurant opened in 1948, but it did not incorporate a drive-thru window into its operations until 1975.

What began nearly 90 years ago as a convenience that capitalized on the growing popularity of the automobile, and was slow to catch on, is now proving to be an economic lifeline for fast-food restaurants in the age of the coronavirus.  The drive-thru option is viewed by many as a safe way of purchasing a meal, especially for the elderly and other high-risk groups, because it ensures social distancing and reduces the number of touchpoints.  In fact, many people have started treating drive-thru restaurants like food markets, making fewer trips but placing larger orders.  Wendy’s recently reported that approximately 90% of all sales are now made at the drive-thru window, compared with about two-thirds before the pandemic erupted.  Unfortunately, many restaurants without drive-thrus have been forced to close during the lock-down, and some will likely not reopen.

Despite the importance of drive-thru windows to a fast-food restaurant, and their wide-spread popularity with customers, drive-thrus have never been fully accepted as an accessory use in many communities on Long Island and elsewhere.  In fact, many Long Island communities loathe drive-thrus and either prohibit them or subject them to greater scrutiny than other components of a restaurant use.  For instance, in the Town of Southold’s Hamlet Business (HB) District, fast-food restaurants are permitted by special exception from the Board of Appeals, but “[t]here shall be no counter serving outdoor traffic via a drive-in, drive-through, drive-up, drive-by or walk-up window or door.”  In the Town of Islip, fast-food restaurants with drive-thru windows are prohibited in business districts where fast-food restaurants without drive-thru windows are permitted with a special permit from the Planning Board.  In other parts of the country, there is a movement to ban the construction of drive-thru windows in an attempt to curb vehicle emissions, reduce litter, improve pedestrian safety and walkability, and even as a way to help fight obesity.

From the lessons learned in the wake of the coronavirus, perhaps now is the time for municipalities to become less critical and more accepting of drive-thru windows.  The prevalence of fast-food restaurants with drive-thru windows strongly suggests that this amenity should be treated as a permitted customary and incidental accessory use to a fast-food restaurant.  Of course, drive-thrus need queuing lanes which require more land area and can present potential internal traffic circulation conflicts.  Therefore, it is reasonable for a municipality to require a greater minimum lot area for a fast-food restaurant with a drive-thru, and to subject a restaurant proposal to site plan review.  However, prohibiting or restricting drive-thrus because the added convenience may attract more customers and create additional traffic on the surrounding roads is tantamount to penalizing a business for its success.

As local operators of fast-food restaurants struggle to stay in business during the pandemic, and restaurant employees worry about losing their jobs, hopefully local governments will recognize that drive-thru windows are essential to the success of a fast-food restaurant.  They should then amend their zoning regulations to be more accepting of drive-thru windows, which are an amenity that the public wants and restaurants need . . . now more than ever.

In Matter of Pittsford Canalside Props., LLC v Village of Pittsford Zoning Bd. of Appeals, et al., the Fourth Department held that settlement correspondence between a development firm, Pittsford Canalside Properties, LLC (“PCP” or “Petitioner”), and the Village of Pittsford Architectural Preservation and Review Board (the “ARB”), was not an enforceable settlement agreement.

PCP owned property located within the Village of Pittsford (the “Village”), on which it sought “to construct a multiple-dwelling building community.”  In 2014, PCP unsuccessfully applied to the ARB for a certificate of approval for its proposed construction.  After the ARB issued its denial, the parties engaged in settlement discussions concerning various issues, including the project’s compliance with certain provisions of the Village Code.  These settlement discussions were evidenced by “correspondences and enclosures” exchanged between the parties (the “letters”).  However, the agreed upon terms were never memorialized into a formal settlement document.  When the ARB subsequently refused to issue a certificate of approval, PCP brought an Article 78 proceeding seeking to annul the ARB’s denial.  In support of its petition, PCP argued that the terms of the letters constituted an enforceable settlement agreement.

Following the lower court’s first order directing the ARB to reconsider Petitioner’s application in accordance with the terms of the letters, the ARB again refused to issue a certificate of approval.  Thereafter, the lower court issued a second order directing the ARB to issue Petitioner a certificate of approval, “subject to” the ARB’s normal review process.  The ARB and other interested parties appealed.

Upon appeal, the Fourth Department reversed, holding that the letters did not constitute an enforceable settlement agreement.  Citing cases from the Second and Third Departments, the Court stated that “‘settlement-related writings . . . will not be found to have created a binding agreement if they expressly anticipate a subsequent writing that is to officially memorialize the existence of a settlement agreement and set forth all of its material terms’ (Matter of George W. & Dacie Clements Agric. Research Inst., Inc. v Green, 130 AD3d 1422, 1423-1424 [3d Dept 2015]; see Little v County of Nassau, 148 AD3d 797, 798 [2d Dept 2017][; see also CPLR § 2104]).”  Because the letters exchanged between the parties here “did not contain all the material terms of the settlement,” they were nothing more than “an agreement to agree.”  Any formal settlement was still conditioned upon the ARB’s review of newly submitted documents by Petitioner.  Further, the Court held that the lower court’s directives to the ARB as to what it could or could not consider in rendering its determination were “impermissible intrusions into [the ARB’s] administrative domain,” which should be afforded a broad degree of deference.

When engaging in settlement discussions with administrative agencies (or with any adversary), be aware that no settlement agreement is enforceable unless it contains all material terms in a memorialized writing.  Informal discussions or communications will not suffice.

When deciding an area variance application, a zoning board may consider the proposed use of the property and the purpose in seeking the variance. However, the zoning board cannot fail to account for the five-factor test mandated by statute (see General City Law § 81-b[4][b][i]-[v]; Town Law § 267-b[3][b]; Village Law § 7-712-b[3][b]) and typically included within the respective municipal code or local law.

Last month, the Appellate Division, Third Department, reaffirmed these principles in 209 Hudson St., LLC v Ithaca Bd. of Zoning Appeals, 2020 NY Slip Op 02311 [3d Dept 2020]. In 2017, the petitioner purchased a single lot improved with one house situated within the City of Ithaca (“Ithaca”). The lot was affected by a preexisting side-yard deficiency. The petitioner applied to subdivide the parcel into two lots in furtherance of its development plans, which included retaining the existing home on one lot and constructing a multi-family dwelling on the other. In connection with its project, the petitioner required an area variance from the side-yard setback requirement and sought the same from the Ithaca Board of Zoning Appeals (“Ithaca BZA”). After several public hearings, the Ithaca BZA denied the application, and the petitioner challenged the denial by commencing an Article 78 proceeding in the Supreme Court, Tompkins County. In March 2019, the Supreme Court granted the petition and annulled the denial, the Ithaca BZA appealed, and the Appellate Division affirmed.

The Appellate Division’s decision sets forth the well-known statutory standard by which zoning boards determine whether to grant or deny an area variance, i.e. weighing the benefits to the applicant if granted against the detriment to the health, safety and welfare of the neighborhood or community if granted. In weighing these considerations, zoning boards must consider the five factors: (i) undesirable neighborhood change or detriment to nearby properties; (ii) whether the benefit can be achieved by some other feasible method; (iii) substantiality; (iv) adverse environmental impacts or effects; and (v) self-created hardship. Courts may only set aside a zoning board determination if the board “acted illegally or arbitrarily, or abused its discretion, or . . . merely succumbed to generalized community pressure.”

While the Ithaca BZA was not precluded from considering the petitioner’s proposed use of the property and purpose in seeking the area variance, and while it was entitled to factor the construction of the multifamily dwelling into its determination, the Ithaca BZA failed to set forth a rational basis based upon examination of the five factors. Specifically, the “[Ithaca BZA’s] consideration of the requisite factors . . . rested primarily on the opposing comments provided by those individuals living in the neighborhood,” where the record contained comments from individuals both in favor of and against the petitioner’s application. Moreover, an environmental review of the project concluded there would be no significant impacts to aesthetic or historic resources, the air, land, drainage or open space area; the Ithaca’s Planning Board issued an equivocal opinion about the petitioner’s project; and, the petitioner’s proposed use was a permitted use. The Appellate Division concluded: “Given that the views of the community in opposition to petitioner’s request by itself does not suffice to deny a variance, respondent’s determination lacks a rational basis.”

The Appellate Division’s opinion in 209 Hudson St., LLC reemphasizes that zoning boards may consider matters not directly related to the deficiency or variance request in reaching a determination, but must proffer a rational basis upon an examination of the five factors.